A Couple of Very Important Updates on FHA…

As soon as the mortgagee letter has been published, we’ll interpret it for you.

Secondly, there is a new proposed rule to change seller concessions to 3% of the sales price, or $6,000, whichever is greater. They did it this way so as not to penalize lower priced homes, the very market that FHA is supposed to serve. The last rule proposal in 2010 was for 3% period, and it left lower priced homes at a huge disadvantage. The outcry from the mortgage industry resulted in a hold on the whole thing back in 2010.

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent. This change is effective for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500. This change is effective for case numbers assigned on or after June 1, 2012.

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage. This change is effective for case numbers assigned on or after April 1, 2012.